Student Loan Borrowers Defaults Increase
New research shows more than 1-M student loan borrowers each year go into default and nearly 40% of borrowers are expected to default on their student loans by Y 2023.
Outstanding education debt in the US has 3X’d over the last decade and now exceeds $1.5-T, posing a greater burden to Americans than auto or credit card debt.
A new report from the Urban Institute, a progressive think tank in Washington, DC, analyzed the fates of borrowers who entered repayment in Y 2012.
Federal loans come with a lot of protections that should make default rare, Kristin Blagg, a research associate at the Urban Institute, focusing on education, said Monday
However, those safeguards often fail.
Within 4 years after leaving school, nearly a quarter of the borrowers had defaulted.
Defaulters are less likely than nondefaulters to have types of debt that require a risk assessment, like credit card, auto and mortgage debt. They’re more likely than nondefaulters to have their utility and medical bills fall into collections, as well
People who default on their student loans are more likely to live in Hispanic and black neighborhoods, Blagg found.
The average defaulter resides in an area where the median income is around $50,000, compared with around $60,000 for nondefaulters.
Outstanding student loan debt has reached a peak of $1.5-T. An even more alarming stat: approximately 5-M borrowers nationwide are defaulting on their loans.
“Student loan debt, and the growing struggle to repay it, has been a hot button issue in Y 2018. While some point to the rising cost of education as the problem, others cast blame on loan servicer, the companies responsible for handling the repayment process.
According to a study by American Student Assistance, 46% of borrowers said monthly student loan repayment was difficult or very difficult. The overwhelming majority (60%) said their problems with the ability to repay stemmed from the ability to pay back the requested amount.
Yes, personal loans surged to a record this year and are the fastest-growing US consumer-lending category, according to data from credit bureau TransUnion.
Outstanding balances rose about 18% in Q-1 of Y 2018 to $120-B. Fintech companies originated 36% of total personal loans in Y 2017 compared with less than 1% in Y 2010, Chicago-based TransUnion said.
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